Families that brought a class action over the biggest case of child poisoning since thalidomide were celebrating tonight after reaching an out-of-court settlement with their local council. The result ends an 11-year battle waged by the families of 19 children born with deformities caused by toxic dust from a former steelworks in Corby, Northamptonshire.

In a landmark high court ruling last July, Corby borough council was found negligent in its management of waste at the site during the 1980s and 1990s. The council had denied it was negligent or that there was a link between the waste removal and deformities affecting hands and feet.

Today, however, it agreed to drop its challenge to the ruling and said it had reached a final, binding agreement with the 19 young people involved in the action. It continues to deny liability.

Des Collins, solicitor for the families, said that his clients lived with the daily reminder of the sub-standard clean-up of the former British Steel plant. "Of course, no financial sum can properly compensate for their lifelong deformities and disabilities," he said.

"However, they are relieved that their long battle is now over. Today's agreement recognises the many years of emotional and physical suffering the 19 families have endured and will continue to endure. It marks the end of an arduous 11-year legal challenge and removes the prospect of further litigation.

"Importantly, it also provides a financial award which will help towards the healthcare costs and loss of earnings they will inevitably face in the future." He said the agreement set a legal precedent in local authorities' duty of care.

A joint statement by the council and Collins said that financial terms of settlement remained confidential and would require approval by the court in the case of the younger children. Lawyers for the families have previously said it was unlikely that any compensation claim would be for less than £100,000.

After the 680-acre steelworks was closed in 1980, its buildings were gradually demolished and waste was removed to a quarry to the north of the site.

The mothers of children at the centre of the class action, which began after four families became aware of each others' existence as a result of press coverage of the works' redevelopment, had told the high court how they either lived in, or regularly visited, Corby while pregnant.

Speaking after the announcement, Louise Carley, whose daughter Ashleigh Custance, now 11, has problems with her right hand and arm, said: "I'm relieved. It's a good outcome after a long battle. I thought they would appeal, they kept saying they were going to.

"But the mediation went well this week and now we're here. This is closure, it means we can move on with our lives. We know what happened and we know why and we can get on with our future."

The 35-year-old retail manager, who recently returned to Corby after 10 years living in nearby Kettering, said the money would not make up for the difficulties they had experienced, but would help for future care and treatment.

"It's the first time they have said sorry," she said. "That means more than anything. It's the fact it's not my fault any more. That's what puts closure on it."

Issuing an apology that was welcomed by the families, Corby council chief executive Chris Mallender said: "The council recognises that it made mistakes in its clean-up of the former British Steel site years ago and extends its deepest sympathy to the children and their families.

"Although I accept that money cannot properly compensate these young people for their disabilities and for all that they have suffered to date and their problems in the future, the council sincerely hopes that this apology coupled with today's agreement will mean that they can now put their legal battle behind them and proceed with their lives with a greater degree of financial certainty."

The Corby scandal has been described as the biggest child poisoning case since thalidomide, the tranquilliser given to pregnant women as a cure for morning sickness. In the late 1950s and 1960s, more than 10,000 babies were born with deformities however, and millions of pounds has since been paid in compensation.